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When discussing some of the side bets in blackjack, you’ll notice that I use terms like “expected return” and “house edge.” Here’s an explanation of those concepts.

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The expected return is the amount of money that you can expect to win or lose (in the long run) from each wager. For example, if you’re placing an even-money $1 bet, and your chances are 40% fora win and 60% for a loss. This would give you the following: $0.40 – $0.60 = -$0.20. The negative sign in front of the total means that for every dollar wagered you can expect to lose $0.20 (onaverage, over a long period of time—in the short run, anything can happen).

Here’s an example where you have multiple options for winning. Let’s say that you’re betting $1 on a slot machine, and you have a 20% chance of winning $4, a 25% chance of winning $3, and a 55%chance of losing. Here’s how the expected return would be calculated:

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20% x $4 = $0.80

25% x $3 = $0.75

55% x -$1 = -$0.55

$0.80 + $0.75 – $0.55 = $1

In this example, you could expect to win $1 per spin over the long term. Of course, no sane casino ever offers a slot machine game with a positive return.

The house edge, meanwhile, is the ratio of the average loss to the initial bet. Expressed as a percentage, this number demonstrates the subtle way in which casino games bleed aplayer dry.

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For example, a 5% house edge means you can expect to lose $5 for every $100 wagered—or $0.05 for every $1. This might not sound like a lot, but it gives the casino a financial advantage over theplayer and allows for a steady accumulation of profit.

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Game designers and casinos carefully calculate the expected return and house edge before putting a game on the casino floor. The end result is that the house almost always has an advantage overthe player, which explains why the major casinos rake in obscene amounts of money on an annual basis.